Keeping this in mind, let's analyze whether The PNC Financial Services Group Inc. (NYSE:PNC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
The PNC Financial Services Group Inc. (NYSE:PNC) has seen an increase in activity from the world's largest hedge funds of late. The PNC Financial Services Group Inc. (NYSE:PNC) was in 52 hedge funds' portfolios at the end of June. The all time high for this statistics is 51. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PNC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Emanuel Friedman of EJF Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind let's take a look at the key hedge fund action regarding The PNC Financial Services Group Inc. (NYSE:PNC).
Hedge fund activity in The PNC Financial Services Group Inc. (NYSE:PNC)
At second quarter's end, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in PNC a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Berkshire Hathaway held the most valuable stake in The PNC Financial Services Group Inc. (NYSE:PNC), which was worth $562.9 million at the end of the third quarter. On the second spot was D1 Capital Partners which amassed $101 million worth of shares. Millennium Management, Marshall Wace LLP, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Hi-Line Capital Management allocated the biggest weight to The PNC Financial Services Group Inc. (NYSE:PNC), around 3.17% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, dishing out 2.43 percent of its 13F equity portfolio to PNC.
As aggregate interest increased, some big names were breaking ground themselves. D1 Capital Partners, managed by Daniel Sundheim, assembled the biggest position in The PNC Financial Services Group Inc. (NYSE:PNC). D1 Capital Partners had $101 million invested in the company at the end of the quarter. George Soros's Soros Fund Management also initiated a $22.9 million position during the quarter. The other funds with new positions in the stock are Emanuel J. Friedman's EJF Capital, Dmitry Balyasny's Balyasny Asset Management, and Michael Anderson's Hi-Line Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as The PNC Financial Services Group Inc. (NYSE:PNC) but similarly valued. We will take a look at Aon plc (NYSE:AON), Atlassian Corporation Plc (NASDAQ:TEAM), Honda Motor Co Ltd (NYSE:HMC), Workday Inc (NASDAQ:WDAY), Edwards Lifesciences Corporation (NYSE:EW), Baxter International Inc. (NYSE:BAX), and Itau Unibanco Holding SA (NYSE:ITUB). This group of stocks' market values match PNC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AON,57,4755205,10 TEAM,55,2872691,-4 HMC,10,296833,2 WDAY,73,3444523,15 EW,45,1391002,-4 BAX,59,2583223,9 ITUB,20,352115,4 Average,45.6,2242227,4.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.6 hedge funds with bullish positions and the average amount invested in these stocks was $2242 million. That figure was $1108 million in PNC's case. Workday Inc (NASDAQ:WDAY) is the most popular stock in this table. On the other hand Honda Motor Co Ltd (NYSE:HMC) is the least popular one with only 10 bullish hedge fund positions. The PNC Financial Services Group Inc. (NYSE:PNC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PNC is 73.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately PNC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on PNC were disappointed as the stock returned 11.5% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.